如新 (NUS) 2023 Q3 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Nu Skin Enterprises Third Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note that today's conference may be recorded.

美好的一天，女士們先生們。謝謝你的支持。歡迎參加如新企業 2023 年第三季財報電話會議。 （操作員說明）請注意，今天的會議可能會被錄音。

I will now hand the conference over to your speaker host, Mr. Scott Pond, Vice President of Investor Relations. Please go ahead.

現在，我將會議交給演講主持人、投資者關係副總裁 Scott Pond 先生。請繼續。

Thanks, Olivia, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO; and James Thomas, CFO.

謝謝奧利維亞，大家下午好。今天與我通話的是總裁兼執行長 Ryan Napierski；和首席財務官詹姆斯托馬斯。

On today's call, comments will be made that include some forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks.

在今天的電話會議上，將發表評論，其中包括一些前瞻性陳述。這些陳述涉及風險和不確定性，實際結果可能與討論或預期的結果有重大差異。請參閱今天的收益報告和我們向 SEC 提交的文件，以了解對這些風險的完整討論。

Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website for any required reconciliation of non-GAAP numbers.

此外，在電話會議期間，可能會討論某些與我們財務報表中獲得的可比較數據不同的財務數據。我們相信這些非公認會計原則數字有助於以更一致的方式比較不同時期的結果。請參閱我們的投資者網站，以了解任何所需的非 GAAP 資料調整。

And with that, I'll turn the call over to Ryan.

然後，我會將電話轉給瑞安。

Thanks, Scott. Hello, everyone. Thanks for joining us today. These are very important times for our company as we continue to navigate our enterprise transformation amidst the macro environmental headwinds impacting consumers around the globe and pivot our business accordingly. Our third quarter performance was mixed with notable progress on strategic initiatives overshadowed by escalating pressures in key markets of our Nu Skin core business, particularly evident during the last half of this past quarter. This led to sales below our expectation and non-GAAP earnings per share to the low end of our guide.

謝謝，斯科特。大家好。感謝您今天加入我們。對於我們公司來說，這是非常重要的時刻，因為我們在影響全球消費者的宏觀環境逆風中繼續引導我們的企業轉型，並相應地調整我們的業務。我們第三季的業績好壞參半，戰略舉措方面取得的顯著進展被如新核心業務關鍵市場不斷升級的壓力所掩蓋，這一點在上個季度的後半段尤為明顯。這導致銷售額低於我們的預期，非公認會計原則每股收益達到我們指南的低端。

In the 3rd quarter, our revenue was $499 million with Q3 non-GAAP earnings per share of $0.56 when excluding a strategic inventory write-down. The primary factor leading to our underperformance was Mainland China. We had projected to grow for China in the second half of the year based on improving trends in the first half and even into early Q3. But a significant slowdown in consumer spending across the broader economy reversed those early trends.

第三季度，我們的營收為 4.99 億美元，第三季非 GAAP 每股盈餘為 0.56 美元（不含策略性庫存減記）。導致我們表現不佳的主要因素是中國大陸。基於上半年乃至第三季初的改善趨勢，我們預期中國將在下半年實現成長。但整個經濟領域消費者支出的大幅放緩扭轉了這些早期趨勢。

In the Americas, prolonged inflation has constrained incomes and led to a more cautious and price-sensitive consumer. However, growth in our regions and other regions partially offset these challenges. Japan, Hong Kong, Taiwan and Europe all experienced notable gains with the introduction of ageLOC WellSpa iO. We also generated sequential growth in our Southeast Asia Pacific and South Korea segments.

在美洲，長期的通貨膨脹限制了收入，導致消費者更加謹慎和對價格敏感。然而，我們地區和其他地區的成長部分抵消了這些挑戰。隨著ageLOC WellSpa iO 的推出，日本、香港、台灣和歐洲都取得了顯著的成果。我們的東南亞太平洋地區和韓國業務也實現了連續成長。

It's important to call out our Rhyz segment that performed well above expectations, which I'll discuss more in just a moment.

重要的是要指出我們的 Rhyz 細分市場的表現遠遠超出預期，我稍後將對此進行更多討論。

While our strategic initiatives associated with our Nu Skin core business transformation have generated some positive lift in key areas over the past quarters, the pace of improvement has been slower than expected, primarily due to macro factors that I just discussed. Consequently, we'll continue refining our tactics to sync with market dynamics and maximize our investments across 3 strategic imperatives: EmpowerMe personalization, social commerce and our digital ecosystem.

雖然我們與如新核心業務轉型相關的策略性舉措在過去幾季在關鍵領域產生了一些積極的提升，但改善的速度慢於預期，這主要是由於我剛才討論的宏觀因素。因此，我們將繼續完善我們的策略，以與市場動態同步，並最大限度地提高我們在三個策略要務上的投資：EmpowerMe 個人化、社交商務和我們的數位生態系統。

During the quarter, we continued to advance our EmpowerMe strategy through the Mainland China and Korea rollouts of ageLOC TRMe personalized weight management system and the introduction of our second connected device system, ageLOC WellSpa iO, into many of our markets.

本季度，我們繼續推動 EmpowerMe 策略，在中國大陸和韓國推出ageLOC TRMe個人化體重管理系統，並將我們的第二個連網設備系統ageLOC WellSpa iO引入我們的許多市場。

We remain focused on enhancing our personalization journey with our connected device road map, with iO device systems currently contributing 14% of revenue in the third quarter. This aligns with our near-term goal of 15% and our long-term target of 30% by 2025. To date, we have logged more than 9 million connected device treatments and collected over 100 million unique data insights, which will play an increasingly meaningful role as we lean further into our personalization, beauty and wellness journey.

我們仍然專注於透過連網設備路線圖增強我們的個人化之旅，iO 設備系統目前貢獻了第三季營收的 14%。這與我們2025 年15% 的近期目標和30% 的長期目標一致。迄今為止，我們已經記錄了超過900 萬次連網裝置治療，並收集了超過1 億個獨特的數據見解，這將日益重要的作用。隨著我們進一步邁向個人化、美麗和健康之旅，我們將扮演一個有意義的角色。

Next, we continue to make modifications to our affiliate powered business model to better support new business builders, which are yielding some promising outcomes in recent trials across multiple markets most notably in Japan and parts of Latin America. We will continue to lean further into this new affiliate journey as an increasing portion of today's workforce seeks more flexible ways of working in the gig and more economy.

接下來，我們繼續對我們的聯盟行銷模式進行修改，以更好地支持新的業務建設者，這些業務建設者最近在多個市場（尤其是日本和拉丁美洲部分地區）的試驗中取得了一些有希望的成果。隨著當今越來越多的勞動力尋求更靈活的零工和更經濟的工作方式，我們將繼續進一步推動這一新的聯盟之旅。

As a reminder, our affiliate numbers were impacted by adjustments made to the eligibility requirements for affiliate rewards in some markets beginning in Q2 and continuing through 2024.

提醒一下，我們的聯盟行銷數量受到了從第二季度開始一直持續到 2024 年某些市場中對聯盟行銷獎勵資格要求的調整的影響。

For our digital ecosystem, we are continuously enhancing the features and capabilities of our Vera and Stela apps to strengthen connections with our customers and affiliates. Following recent tests of new promotional features of Vera in Europe, we were very encouraged by the revenue that was generated and the potential for coordinated app-based global promotions in 2024. Our monthly active user ratio increased to 18% of monthly active customers for Vera, which is tracking behind our target of 30%, mostly due to slower adoption in Asia.

對於我們的數位生態系統，我們不斷增強 Vera 和 Stela 應用程式的特性和功能，以加強與客戶和附屬公司的聯繫。在最近在歐洲測試了 Vera 的新促銷功能後，我們對所產生的收入以及 2024 年協調基於應用程式的全球促銷的潛力感到非常鼓舞。我們的月度活躍用戶比例增至 Vera 月度活躍客戶的 18% ，這落後於我們30% 的目標，主要是因為亞洲的採用速度較慢。

For Stela, we have more than doubled our annual target of monthly active users this year with 68% of average monthly paid affiliates on the app. We will be focusing on 2024 upon driving deeper connections with our customers and affiliates through these apps to expand engagement and conversion, resulting in improved lifetime value.

對於 Stela，我們今年的每月活躍用戶年度目標增加了一倍多，該應用程式上平均每月付費的會員比例達到 68%。到 2024 年，我們將重點放在透過這些應用程式與客戶和附屬公司建立更深入的聯繫，以擴大參與度和轉換率，從而提高終身價值。

Given the robustness of Rhyz, it's important for us to dive deeper into these business segments as we lean further into our broader enterprise strategy. Rhyz consists of several dynamic businesses, including Mavely, a leading affiliate marketing and technology platform, which connects nearly 800 retail and brands to more than -- retailers and brands to more than 45,000 Mavely affiliates and helps power our Vera app: Wasatch and Elevate manufacturing, which currently serves more than 120 customers, including Nu Skin; BeautyBio, our most recent clean beauty omnichannel acquisition, which continues to expand its retail and digital channels; and like DNA, a DNA recommendation, which holds significant future potential for our broader personalization strategy.

鑑於 Rhyz 的穩健性，當我們進一步關注更廣泛的企業策略時，深入研究這些業務領域對我們來說非常重要。 Rhyz 由多個充滿活力的業務組成，其中包括Mavely，這是一個領先的聯盟行銷和技術平台，它將近800 個零售和品牌與超過45,000 個Mavely 聯盟公司連接起來，並幫助支援我們的Vera 應用程式：Wasatch 和Elevate 製造，目前為 120 多家客戶提供服務，其中包括 Nu Skin； BeautyBio，我們最近的清潔美容全通路收購，繼續擴大其零售和數位通路；與 DNA 一樣，DNA 推薦對於我們更廣泛的個人化策略具有巨大的未來潛力。

Rhyz now accounts for 12% of our business, and we anticipate it growing to 20% to 25% of revenue over the next 2 years. This segment delivered more than 40% growth year-over-year in the quarter, underscoring the robustness of these businesses. Moreover, it advances our enterprise strategy of evolving Rhyz into a synergistic ecosystem of consumer, technology and manufacturing companies that not only enhance our core business but also facilitate our broader beauty and wellness ecosystem enterprise transformation. While we have not yet talked in-depthly about our Rhyz strategy, I'm personally very excited about sharing our broader enterprise vision with you early next year.

Rhyz 目前占我們業務的 12%，我們預計在未來 2 年內它將成長到營收的 20% 至 25%。該部門本季年增超過 40%，凸顯了這些業務的穩健性。此外，它還推進了我們的企業策略，將 Rhyz 發展成為消費者、技術和製造公司的協同生態系統，這不僅增強了我們的核心業務，而且促進了我們更廣泛的美容和健康生態系統企業轉型。雖然我們尚未深入討論我們的 Rhyz 策略，但我個人非常高興能在明年初與您分享我們更廣泛的企業願景。

Before wrapping up, I'd like to share some insights on our approach to managing the business in the near term as we navigate the macro environmental uncertainties, striking a balance between executing our long-term strategy while upholding our commitment to delivering value to our shareholders. The continued headwinds around the globe remain exceedingly dynamic, and visibility is constrained as conditions can evolve swiftly.

在結束之前，我想分享一些關於我們在應對宏觀環境不確定性時管理業務的方法的一些見解，在執行我們的長期戰略與堅持為我們的客戶創造價值的承諾之間取得平衡。股東。全球範圍內持續的逆風仍然非常活躍，而且由於情況可能迅速變化，能見度受到限制。

At the same time, we have ambitious plans in place for 2024 to accelerate growth in our Nu Skin core business as well as the enterprise, including the introduction of an entirely new mental wellness category, which will incorporate several strategic investments made over the past few years. Therefore, it is paramount that we simplify our business to the core value drivers, focus strictly on priority work and execute with excellence in areas where we have the greatest control.

同時，我們制定了到 2024 年的雄心勃勃的計劃，以加速如新核心業務和企業的成長，包括推出全新的心理健康類別，其中將納入過去幾年進行的多項策略投資年。因此，至關重要的是，我們將業務簡化為核心價值驅動因素，嚴格專注於優先工作，並在我們擁有最大控制權的領域中卓越執行。

To this end, we are strategically reevaluating our Nu Skin core business under the premise of one global business, a holistic competitive advantage that enables us to operate more effectively and efficiently around the globe. This retooling will include, number one, a strategic global realignment of our product portfolio, focusing on our Hero brands; number two, global process and organization remapping the way we work as one global team; and number three, an operational footprint review, including where and how we operate in our markets. This retooling will improve overall effectiveness of execution and efficiency of work that will result in increasing cash flows, improving margins and enhanced earnings per share in the coming year.

為此，我們正在策略性地重新評估我們的如新核心業務，以單一全球業務為前提，這是一種整體競爭優勢，使我們能夠在全球範圍內更有效、更有效率地運作。此次重組將包括，第一，對我們的產品組合進行全球策略調整，並專注於我們的英雄品牌；第二，全球流程和組織重新規劃我們作為一個全球團隊的工作方式；第三，營運足跡審查，包括我們在市場的地點和方式。此次重組將提高整體執行效率和工作效率，從而增加來年的現金流量、提高利潤率和每股盈餘。

For example, we are thoroughly reevaluating our product portfolio relative to our integrated Beauty and Wellness strategy and anticipate eliminating 20% to 30% of nonstrategic SKUs over the next 12 to 18 months. We are also exploring additional opportunities to optimize our global operations adhering to our one global business approach to market.

例如，我們正在根據綜合美容與健康策略徹底重新評估我們的產品組合，並預計在未來 12 至 18 個月內消除 20% 至 30% 的非策略性 SKU。我們也正在探索更多機會來優化我們的全球運營，秉承我們單一的全球業務市場策略。

I'd also like to note that Connie Tang has decided to step down from her role as Global Growth Officer due to family health matters. Connie has been a great strategic partner over the past 2 years. But with this change, we will be realigning our organization to create greater strategic alignment between regions and global functions in order to further enhance our go-to-market execution.

我還想指出，由於家庭健康問題，康妮唐 (Connie Tang) 決定辭去全球成長官的職務。在過去的兩年裡，康妮一直是一位出色的策略夥伴。但隨著這項變化，我們將重新調整我們的組織，以在地區和全球職能之間建立更大的策略一致性，從而進一步增強我們的市場執行力。

Throughout our nearly 40-year history, we have confronted numerous challenges and have repeatedly demonstrated our ability to navigate uncertainties with our resilient business model and sales force. We maintain a strong balance sheet and financial prudence to ensure that we're able to invest in the businesses needed while returning value, including a healthy dividend to our investors. I'm confident that we'll continue to discover new and compelling opportunities, amidst these disruptive times, generating long-term growth and value for shareholders.

在我們近 40 年的歷史中，我們面臨著無數挑戰，並一再證明我們有能力憑藉富有彈性的業務模式和銷售團隊來應對不確定性。我們保持強勁的資產負債表和財務審慎，以確保我們能夠投資所需的業務，同時回報價值，包括向投資者提供健康的股息。我相信，在這個顛覆性的時代，我們將繼續發現新的、引人注目的機會，為股東創造長期成長和價值。

So with that, let me turn the time over to James to take you through our financials in more detail, including our guidance for Q4 and end of year and then on to Q&A. James?

因此，讓我把時間交給詹姆斯，讓您更詳細地了解我們的財務狀況，包括我們對第四季和年底的指導，然後是問答。詹姆士？

Thank you, Ryan, and thanks to all of you for joining today. I'll provide a brief Q3 financial review and then give Q4 projections and update full year 2023 guidance. For additional details, please visit our Investor Relations website.

謝謝瑞安，也謝謝大家今天的加入。我將提供簡短的第三季財務回顧，然後給出第四季度預測並更新 2023 年全年指引。如需了解更多詳情，請造訪我們的投資者關係網站。

For the third quarter, we posted revenue of $498.8 million with a negative foreign currency impact of 1.5% or $8.1 million. Reported earnings per share for the quarter was negative $0.74 or $0.56 when excluding inventory write-off charge. Given the state of the business and in line with the strategic review Ryan mentioned, we've made the decision to rebalance and narrow our product portfolio, resulting in a $65.7 million inventory write-off. This decision helps accelerate our product portfolio optimization by further aligning our product offerings with our EmpowerMe integrated beauty and wellness strategy. We expect the benefits from the product portfolio optimization to be realized over the next 2 to 3 years with the ability to support our business with lower inventory levels to free up our cash to invest in areas of growth across the enterprise as well as enabling faster responses to market demand, customer preferences and shifts in the competitive landscape.

第三季度，我們公佈的營收為 4.988 億美元，匯率負面影響為 1.5%，即 810 萬美元。本季報告的每股收益為負 0.74 美元，若不包括庫存沖銷費用則為 0.56 美元。鑑於業務狀況並根據 Ryan 提到的策略審查，我們決定重新平衡並縮小我們的產品組合，從而導致 6570 萬美元的庫存沖銷。這項決定進一步使我們的產品與 EmpowerMe 綜合美容和健康策略保持一致，有助於加速我們的產品組合優化。我們預計產品組合優化的好處將在未來 2 至 3 年內實現，能夠以較低的庫存水平支持我們的業務，釋放現金投資於整個企業的成長領域，並實現更快的響應市場需求、客戶偏好和競爭格局的變化。

Our gross margin was 58.6% or 71.8% when excluding the inventory charge. Gross margin for the core Nu Skin business was 61.8% or 76.8%, excluding the inventory write-off compared to 73% or 76.7% excluding restructuring charges in Q3 of 2022.

扣除庫存費用後，我們的毛利率為 58.6% 或 71.8%。如新核心業務的毛利率為 61.8% 或 76.8%（不包括庫存沖銷），而 2022 年第三季的毛利率為 73% 或 76.7%（不包括重組費用）。

With the 45% growth of our Rhyz segment, this has a negative impact on our overall reported gross margin while positively affecting selling expenses for the consolidated group. Selling expense as a percentage of revenue was 37.6%, 270 basis points below the prior year period. The lower selling expense is due in large part to growth in our Rhyz manufacturing segment, which represented 10% of our total sales. For the core Nu Skin business, selling expense was 41.7% compared to 43.5%.

我們的 Rhyz 部門成長了 45%，這對我們報告的整體毛利率產生了負面影響，同時對合併集團的銷售費用產生了正面影響。銷售費用佔收入的百分比為 37.6%，比去年同期低 270 個基點。銷售費用的下降在很大程度上歸因於我們的 Rhyz 製造部門的成長，該部門占我們總銷售額的 10%。對於如新核心業務，銷售費用為 41.7%，而同期為 43.5%。

General and administrative expenses declined $7 million year-over-year as prudent expense management remains a top priority. As a percentage of revenue, G&A was 26.2% compared to 25.7% in the prior year. Operating margin for the quarter was negative 5.3% or 7.9% excluding inventory write-off charges compared to negative 3.8% or 6.8%, excluding restructuring charges in the prior year. The other income expense line reflected an $8.1 million expense.

由於審慎的費用管理仍然是重中之重，一般和管理費用較去年同期下降了 700 萬美元。 G&A 佔收入的百分比為 26.2%，而前一年為 25.7%。本季營業利益率為負 5.3% 或 7.9%（不含庫存沖銷費用），而上一年的營業利潤率為負 3.8% 或 6.8%（不包括重組費用）。其他收入支出項目反映了 810 萬美元的支出。

We generated strong cash from operations for the third quarter of $51 million compared to $28.4 million in the prior year period. This was mainly driven by greater inventory conversion led by the market previews of TRMe and WellSpa iO. We paid $19.5 million in dividends and repurchased $13 million of our stock with $162.4 million remaining on the current authorization.

第三季我們從營運中獲得了 5,100 萬美元的強勁現金，而去年同期為 2,840 萬美元。這主要是由於 TRMe 和 WellSpa iO 的市場預覽導致庫存轉換率提高。我們支付了 1,950 萬美元的股息，並回購了 1,300 萬美元的股票，目前授權剩餘 1.624 億美元。

Our tax rate for the quarter was negative 7.3% or 10.1% excluding inventory write-offs compared to 12.3% or 24%, excluding restructuring charges in the prior year period. Our tax rate was negatively impacted by the reduced earnings in the U.S. as a result of the inventory write-offs. We expect additional pressure with our Q4 2023 restructuring and are anticipating a Q4 adjusted tax rate of 26% to 30% or an annual adjusted tax rate of 20% to 24%.

我們本季的稅率為負 7.3% 或 10.1%（不含庫存沖銷），而去年同期稅率為 12.3% 或 24%（不含重組費用）。我們的稅率受到庫存沖銷導緻美國收入減少的負面影響。我們預計 2023 年第四季的重組將面臨額外壓力，並預計第四季度調整後稅率為 26% 至 30%，或年度調整後稅率為 20% 至 24%。

Shifting focus now to guidance. Given the aforementioned economic conditions and the recent business trends, we are adjusting our annual guidance, which includes an anticipated Q4 restructuring charge of $15 million to $25 million. We now expect 2023 revenue of $1.92 billion to $1.96 billion. We anticipate earnings per share of negative $0.10 to $0.05 or $1.62 to $1.77, which excludes the inventory write-off and restructuring charges for 2023. This guidance assumes a negative foreign currency impact of approximately 2% to 3%. We are projecting fourth quarter revenue of $440 million to $480 million, assuming a foreign currency headwind of approximately 3% with reported earnings per share of negative $0.14 to $0.01 or $0.15 to $0.30 when excluding the fourth quarter charge.

現在將重點轉向指導。鑑於上述經濟狀況和近期業務趨勢，我們正在調整年度指導，其中包括預計第四季度的重組費用為 1500 萬至 2500 萬美元。我們目前預計 2023 年營收為 19.2 億至 19.6 億美元。我們預計每股收益為負 0.10 至 0.05 美元或 1.62 至 1.77 美元，其中不包括 2023 年的庫存沖銷和重組費用。本指引假設外匯影響約為 2% 至 3%。我們預計第四季營收為 4.4 億至 4.8 億美元，假設外匯逆風約為 3%，報告每股收益為負 0.14 至 0.01 美元，或排除第四季費用時為負 0.15 至 0.30 美元。

In closing, while our Nu Skin business continues to decline from macro challenges, we remain steadfast in our dedication in driving forward our key initiatives while also prioritizing our financial strength. This involves streamlining expenses maximizing our cash flow and actively pursuing avenues for increased operational efficiencies by further leveraging our Rhyz ecosystem in order to invest in future growth.

最後，儘管我們的如新業務因宏觀挑戰而持續下滑，但我們仍然堅定不移地致力於推動我們的關鍵舉措，同時優先考慮我們的財務實力。這包括精簡開支、最大化我們的現金流，並透過進一步利用我們的 Rhyz 生態系統積極尋求提高營運效率的途徑，以便投資於未來的成長。

And with that, operator, we'll now open the call up for questions.

接線員，現在我們將開始提問。

(Operator Instructions) And I'm showing we have a question from Tristen Chau with Stifel.

（操作員說明）我向您展示 Tristen Chau 向 Stifel 提出的問題。

Just a follow-up on your China commentary. I was wondering how the weakening of the Chinese consumer impacts how you're thinking about new product launches and go-to-market changes if the weakness continues for a little bit longer. And then I have two other questions after that.

只是您對中國的評論的​​後續。我想知道如果中國消費者的疲軟持續一段時間，會如何影響您對新產品發布和上市變化的看法。之後我還有另外兩個問題。

Yes, Tristen, great question. Yes, I know we're all reading the same research coming out. But James and I have been over in China now a couple of times over the course of the last couple of months, and we've seen notable implications around consumption in general there. Certainly, research is pointing more towards a very cost-conscious consumer. We, fortunately, our product portfolio, while we do play in a premium and more masstige place, we do have lower-priced products or more value-driven products for the affordable consumer, mass consumer there.

是的，特里斯坦，好問題。是的，我知道我們都在閱讀同樣的研究成果。但在過去的幾個月裡，詹姆斯和我已經去過中國好幾次了，我們已經看到了那裡整體消費的顯著影響。當然，研究更多針對的是非常注重成本的消費者。幸運的是，我們的產品組合，雖然我們確實在高端和更大眾的地方發揮作用，但我們確實為那裡的負擔得起的消費者、大眾消費者提供價格較低的產品或更有價值的產品。

So as we see these trends moving along, I would see opportunities for us to lean further into product lines like our Nutricentials line. Even TRMe versus our TR90 system is a more price-sensitive line. And so we'll see, you'll likely see more of that from us. From a go-to-market side, we will continue to expand our Tencent partnership, our go-to-market leveraging our e-commerce capabilities over there as well in the near to mid-term. So those are probably the two biggest things.

因此，當我們看到這些趨勢不斷發展時，我會看到我們有機會進一步向我們的 Nutricentials 系列等產品線傾斜。甚至 TRMe 與我們的 TR90 系統相比也是一個對價格更敏感的系列。所以我們拭目以待，您可能會從我們這裡看到更多這樣的內容。從進入市場的角度來看，我們將繼續擴大與騰訊的合作夥伴關係，並在中短期內利用我們在當地的電子商務能力來進入市場。所以這可能是最重要的兩件事。

Got it. And then just say on China, it seems that consumers are responding more to promotions compared to historical levels. And so does that change how you're thinking about how you have to compete in the region?

知道了。就中國而言，與歷史水準相比，消費者對促銷活動的反應似乎更大。那麼這是否會改變您對如何在該地區競爭的看法？

Yes, absolutely. I think, again, it goes all the way back to the price value and price competitiveness right now for the consumer. Our business promotions are very -- we have to be very sensitive in how we apply them because they do tend to disrupt traditional product cycles and such. But when we think about things like November 11 and major events like that, promotion is certainly a critical part of our strategy. And we'll continue to be so as we manage brand equity through that process. I think for us, making certain we lean on the value proposition per brand is going to be very important. So the more price-conscious brand, we can be more aggressive on than maybe those that are more premium position that have a higher level of science, research and development, that sort of thing.

是的，一點沒錯。我認為，這又回到了消費者現在的價格價值和價格競爭力。我們的業務促銷非常 - 我們必須對如何應用它們非常敏感，因為它們確實會破壞傳統的產品週期等。但當我們考慮 11 月 11 日等重大活動時，促銷無疑是我們策略的重要組成部分。當我們透過這個過程管理品牌資產時，我們將繼續這樣做。我認為對我們來說，確保我們依賴每個品牌的價值主張將非常重要。因此，對於價格敏感的品牌，我們可以比那些具有更高水準的科學、研發等方面的高端品牌更加積極。

Got it. And then last one, have you seen any changes in the growth rates in the parts of the beauty market where you compete?

知道了。最後一個問題是，您所競爭的美容市場部分的成長率有什麼變化嗎？

Yes. So yes, that's a great question. So in terms of like most recent research, when we look at the 3rd quarter, I haven't seen any direct research yet on categories within beauty and wellness that would point us. What we're reading anecdotally -- I'm speaking more from like the Euromonitor site, I think that's going to take a little more time to research. What we are seeing, though, are mass consumer goods, like the Procter & Gambles, those sorts playing well. Obviously, people needing the necessities while luxury is under a bit more pressure from those types of companies.

是的。是的，這是一個很好的問題。因此，就最近的研究而言，當我們看到第三季時，我還沒有看到任何關於美容和健康類別的直接研究可以為我們指明方向。我們讀到的軼事——我更多是從 Euromonitor 網站上談論的，我認為這將需要更多的時間來研究。不過，我們看到的是大眾消費品，像是寶潔公司，這類產品表現良好。顯然，需要必需品和奢侈品的人們面臨著來自這類公司的更大壓力。

But I still, we still believe in the long tail of the device -- beauty device market and the wellness device market that we now plan with WellSpa iO. We believe in the mid to long term that deep customer connection and that insights-driven approach to personalization is going to be a winning strategy long term. So we're continuing to invest in the devices. And the device systems, we think are important. We'll continue to invest in premium, but we are making more and more room for the value consumer in our portfolio as well.

但我仍然相信設備的長尾——我們現在透過 WellSpa iO 規劃的美容設備市場和健康設備市場。我們相信，從中長期來看，深厚的客戶聯繫和洞察驅動的個人化方法將成為長期的勝利策略。因此，我們將繼續投資這些設備。我們認為設備系統也很重要。我們將繼續投資高端產品，但我們也在我們的投資組合中為價值消費者創造越來越多的空間。

And our next question coming from the line of Doug Lane with Water Tower Research.

我們的下一個問題來自水塔研究中心的 Doug Lane。

Ryan, staying on China here, you continue to sound a cautious tone on the business near term. But can you step back and give us your outlook for maybe 3 to 5 years? Has there been any change in your longer-term impact to that market despite the difficulties there for the last 4 or 5 years?

Ryan，留在中國，您對近期業務繼續持謹慎態度。但您能否退後一步，告訴我們您對 3 到 5 年的展望？儘管過去 4 或 5 年遇到了困難，但您對該市場的長期影響是否有任何變化？

Yes, Doug, it's -- by the way, great to have you on the call and connect again. This is -- I really appreciate you spending some time with us. Yes, China is interesting. Again, we spent a lot of time. In fact, we were on with the team again last night. China continues. It's really interesting at the macro because obviously the economies had severe setbacks over the past few years. They're having struggles more immediately with this consumption and even the consumption push and that decrease that's happening at the GDP level. But they still have an enormous middle class. They're still in our business specifically and some of the (inaudible) party talking about economic opportunity in second- and third-tier cities where Nu Skin today, we don't really operate. It's a very small portion of our business outside of those first-tier cities in China.

是的，道格，順便說一句，很高興您能接聽電話並再次聯繫。這是——我真的很感謝您花一些時間與我們在一起。是的，中國很有趣。再次，我們花了很多時間。事實上，我們昨晚又和球隊在一起了。中國繼續。從宏觀角度來看，這確實很有趣，因為顯然經濟在過去幾年中遭受了嚴重挫折。他們更直接地面臨這種消費，甚至是消費推動以及國內生產毛額水準發生的下降。但他們仍然擁有龐大的中產階級。他們仍然在我們的業務中，並且一些（聽不清楚）團體正在談論二線和三線城市的經濟機會，而現在我們並沒有真正在如新經營這些城市。這只是我們在中國一線城市以外的業務的一小部分。

So we know that there's a big middle class. We know near term there's pressure. But mid- to long term, that middle class will continue to consume goods. And we believe there's expansion potential in second- and third-tier cities. And so we're -- by no means do we write off China. We just think it's going to be a an economic recovery period for time. And then we, as a company, need to be smarter in how we reach those consumers. And this is why we're investing more and more in our Tencent engagements because clearly that's kind of a dominant channel.

所以我們知道有一個龐大的中產階級。我們知道近期會有壓力。但從中長期來看，中產階級將繼續消費商品。我們相信二、三線城市還有擴張潛力。因此，我們絕不會忽視中國。我們只是認為這將是一段時間內的經濟復甦期。然後，作為一家公司，我們需要更明智地接觸這些消費者。這就是為什麼我們越來越多地投資騰訊業務，因為顯然這是一個主導管道。

With all the changes going on at Nu Skin over the last couple of years, there have been a substantial retooling of how you go to market. Has there been any real change in China? Or is it still pretty much the same model you've been operating for the last several years?

隨著過去幾年如新發生的所有變化，您進入市場的方式也發生了重大調整。中國有真正的改變嗎？或者它仍然與您過去幾年所使用的模型幾乎相同嗎？

Yes. I would -- yes, it's a great question. We -- no, we have continuously retooled that business. But this is where -- and I appreciate you asking the question. Where our business transformation has been interrupted, it really is around kind of the go-to market. And during that COVID period with lockdowns, especially in China, that most certainly disrupted the way we were historically going to market. You'll recall some of our meetings historically were all about large group meetings. There were a lot of conversations. With COVID, that clearly stopped. But there are companies signaling that, that's kind of the return to growth path. We continue to believe that's not the return to growth path, although meetings for training purposes always play a value for our sales force training and education.

是的。我會——是的，這是一個很好的問題。我們——不，我們不斷地重組該業務。但這就是——我很感謝你提出這個問題。我們的業務轉型被中斷的地方，實際上是圍繞著進入市場。在新冠疫情封鎖期間，尤其是在中國，這無疑擾亂了我們歷來進入市場的方式。您會記得我們歷史上的一些會議都是關於大型團體會議的。有很多談話。有了新冠病毒，這種情況顯然就停止了。但有些公司表示，這就是回歸成長之路。我們仍然相信，這不是恢復成長的道路，儘管出於培訓目的的會議始終對我們的銷售人員培訓和教育有價值。

But in terms of reaching the mass customer, that's got to be through a digital-first strategy that we started investing in and we believe in that future. And so where I would say is China has probably been less progressive in -- or we've been less progressive in China in evolving our go-to-market strategy than in other certain markets that's just because of the dynamics of the macro. And trying to get that business restarted there with a new approach has been more prolonged than we had hoped.

但就接觸大眾客戶而言，這必須透過我們開始投資的數位優先策略，我們相信這一未來。因此，我想說的是，中國在製定進入市場策略方面可能不如其他某些市場那麼進步，這只是因為宏觀的動態。嘗試以新方法重新啟動業務的時間比我們希望的要長。

Yes. No, that's very helpful. And just shifting gears here, James. Can you talk about -- I know you're not talking about 2024 specifically yet. But just on the inflation front, we've gone through this huge wave of inflation that's impacted everybody all over the place. Can you just sort of give us your sense on how the inflationary environment is going to impact your outlook for 2024?

是的。不，這非常有幫助。詹姆斯，只是在這裡換檔。你能談談——我知道你還沒有具體談論 2024 年。但就通貨膨脹而言，我們已經經歷了這一波巨大的通貨膨脹，它影響了世界各地的每個人。您能否告訴我們您對通膨環境將如何影響您對 2024 年前景的看法？

Yes, Doug, and it's good to speak to you again, like Ryan mentioned. We -- this is something from inflationary pressures that we've been monitoring and evaluating throughout the last 2 years. We've looked at it, how it impacts pricing. We've passed on some of those prices to the consumers, but also through our supply chain channels to and how what it's been doing to our costs. So we're trying to be cognizant to make sure that we're protecting our operating margins and the go forward.

是的，道格，很高興再次與您交談，就像瑞安提到的那樣。這是我們過去兩年一直在監測和評估的通膨壓力所造成的。我們已經研究過它如何影響定價。我們已經將其中一些價格轉嫁給了消費者，同時也透過我們的供應鏈管道轉嫁給了我們的成本。因此，我們正在努力認識到，確保我們正在保護我們的營運利潤率和未來發展。

And so as we look out and we project end of year Q4, we're looking at an operating margin very consistent with where we landed in Q3. As it pertains to 2024, we're still monitoring and looking at evaluating what's going to happen to our channel, what's going to happen to our top line, also in addition to what type of growth we think we can see within our Rhyz investment arm through those different businesses that we've acquired.

因此，當我們展望第四季末時，我們看到的營業利潤率與第三季的情況非常一致。就 2024 年而言，我們仍在監控和考慮評估我們的管道將發生什麼、我們的營收將發生什麼，以及我們認為我們的 Rhyz 投資部門可以看到什麼類型的增長透過我們收購的不同業務。

Okay. Well, this has been a fairly abbreviated call. I know some of you are stacked up with other readouts, so -- from other companies. So we'll keep it short. But I just wanted to thank you all for joining the call. As we reflect on this, many of the world's greatest companies right now are experiencing near-term challenges given the macros. I want you to know our team is very committed to continuously evolving our business to position it for greater opportunities ahead.

好的。嗯，這是一個相當簡短的呼叫。我知道你們中的一些人堆滿了來自其他公司的其他讀數。所以我們就長話短說吧。但我只是想感謝大家加入這次電話會議。當我們反思這一點時，鑑於宏觀因素，許多世界上最偉大的公司目前正在經歷近期挑戰。我想讓您知道，我們的團隊非常致力於不斷發展我們的業務，以使其在未來獲得更大的機會。

We firmly believe in our mission of being a global force for good by empowering people to improve lives and doing that through our products and our opportunity to help people look, feel and live better. We will continue to be focused very much on this, refining our strategic positioning and go-to-market plans to really give the world what it's looking for. So we look forward to updating you continuously. We know touching base quarterly is very important. We'll continue to do that and sharing more about our enterprise strategy in the months to come. So thank you all.

我們堅信我們的使命是成為一支全球性的公益力量，透過我們的產品和機會幫助人們改善生活，讓人們看起來、感覺和生活得更好。我們將繼續高度關注這一點，完善我們的策略定位和進入市場計劃，以真正滿足世界的需求。因此，我們期待不斷為您更新。我們知道每季接觸基礎非常重要。我們將繼續這樣做，並在未來幾個月分享更多有關我們企業策略的資訊。謝謝大家。

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.

女士們、先生們，今天的會議到此結束。感謝您的參與。您現在可以斷開連線。